A consortium of Chinese companies will provide 40 per cent of the funding for the US$5.3 billion, 475km (295-mile) railway line from Naivasha, a town in the Central Rift Valley, to Malaba. They will operate the railway and charge toll fees for some years to recoup their investment, according to Kenya’s finance minister John Mbadi.
How long the unnamed consortium will operate the railway is subject to negotiation.
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How China is reshaping its economic ties with Africa
How China is reshaping its economic ties with Africa
Some 30 per cent of the project funding was expected to come from the Export-Import Bank of China (China Exim Bank) in the form of loans, Mbadi told Kenya’s National Assembly in response to questions from parliamentarians.
The Chinese policy bank funded the 590km (367-mile) first phase but the construction ended abruptly in Naivasha after it pulled the plug on financing the extension to Malaba after calling for a new commercial viability study in 2019.
The minister said the new funding strategy involved negotiating a loan deal with China that included a grace period until after 2029, when the country is expected to have paid more than 80 per cent of the loan for the current SGR.
The remaining 30 per cent of the construction cost will be financed by the Kenyan government, mostly from the railways development levy or securitisation of the levy, according to Mbadi.
